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Diageo Uses Experiential Marketing in China at Johnnie Walker House

Marketers Find Innovative Ways to Educate the Newly Affluent About Western Brands

A bar area in the first Johnnie Walker house outside Scotland, located in Shanghai's trendy bar district Sinan Mansions.

Diageo is the latest luxury-goods company to try experiential marketing in China, where many newly affluent consumers are unfamiliar with the heritage of Western brands and want guidance on how to appreciate unfamiliar foreign products.

In the view of the global beverage giant, single malt whiskeys fall into this category. Earlier this year, Diageo opened the first Johnnie Walker House outside Scotland in Sinan Mansions, a chic nightspot district in Shanghai.

The three-story restored house, which has the feel of a private residence, is managed by Singaporean Lawrence Law, brand director for engagement marketing in China for Johnnie Walker at Moet Hennessy Diageo (MHD), the distributor in China. Johnnie Walker is the country's No. 2 whiskey, after Pernod's Chivas Regal.

"We want to build a Scotch whiskey culture in China, [particularly among] stylish, progressive, sophisticated entrepreneurs," Mr. Law said this week on "Thoughtful China," an online marketing-affairs talk show produced in Shanghai (see video below).

For now, entry to the Johnnie Walker House is limited to ultrarich businessmen and their well-heeled adult children; celebrities, such as actors Chen Kun and Xia Yu, and film director Peter Chan; and local trendsetters.

Those who receive a coveted invitation are offered a unique, one-on-one chance to learn about Scotch whiskey. On the ground floor, which features a scale model of a Scottish distillery, visitors are educated about raw materials: barley, water and peat. A sleek bar has been installed on the top floor. But the middle floor holds the real treasure.

An interactive sensory "blending table" in a semicircular room is lined with dozens of numbered -- but, importantly, unlabeled -- bottles of single malt Scotch. High-end liquor is often a status symbol in China, but Diageo wants future connoisseurs to indulge their palates rather than their desire to impress. When placed in the center of the display table, a digital code embedded in the bottom of the bottle initiates an electronic display with information about the contents, while simultaneous sampling illustrates the fundamental aromatic and tasting notes of Scotch whiskey.

Whiskey is still relatively new to wealthy Chinese, who historically celebrated with local spirits like Baijiu, a white spirit distilled from rice, or with cognac. But it's catching on fast in a country where 20 million new consumers reach the legal drinking age each year.

Sales to China are up 35% this year. Greater whiskey consumption has led to an increased desire for information, which Diageo is happy to provide, said Mr. Law of MHD. "We look at what we call creating the new Chinese gentlemen. You can't just know wines, cognacs and Baijiu now. Knowing whiskey is important too."

"Experience does matter a lot for the luxury consumers because they need to feel the brand. It's very important for them to understand the culture of the brand and believe in what the brand is selling them," said Elan Shou, senior VP and managing director-China at Ruder Finn.

In other examples, a Home of Alfred Dunhill store was established in a restored neoclassical villa in Shanghai several years ago, and Hermes-owned Shang Xia celebrated its one-year anniversary in September.

Cartier has held classic-jewelry exhibits in China, and Giorgio Armani has opened Armani bars. L'Oreal created an online social network, Rose Beauty, around its Lancome brand to offer advice beyond skin care and cosmetics.

Diageo "has been extremely astute" by making Bartle Bogle Hegarty's global "Keep Walking" tagline for Johnnie Walker relevant for the Chinese, said Charles de Brabant, Asia director at Saint Pierre, Brabant, Li & Associates. "But one of the things that brands need to think about [is ], 'What do I want to give these people over and above selling them my product?' You have to lock into the lifestyle of those people [and find out] what is important to them," he added

"Lots of shoppers, especially outside of the tier-one cities, are new to luxury brands and easily scared away," said P.T. Black, Thoughtful China's senior creative director.

"Brands talk about the education of the customer, but education goes both ways," Mr. Black said. "It's all well and good to talk about a great wine vintage, but will it go with Cantonese or Shanghainese food? Which pen makes the right gift for what level of business partner? What's the right purse to buy for a wife? What's the right purse to buy for a not-wife?"

Normandy Madden is senior VP-content development, Asia/Pacific at Thoughtful China, and Ad Age 's former Asia Editor. See earlier episodes of Thoughtful China at www.thoughtfulchina.com.